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Options Jive

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Extremes in Commodity Currencies

Options Jive

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

We often trade the difference between Canadian dollar and Aussie as a pair using futures or ETFs because of their rather high and positive correlation. The historical movement of a long Canada and short Aussie position has revealed a mean reversion characteristic. Currently, this spread is at an extreme that has been rarely been reached since 2012.

In order to capitalize on this, we can choose to trade a futures pair due to its simplicity and capital efficiency or we can choose to trade ETFs for smaller, customizable needs.

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